SYDNEY -- The High Court of Australia has rejected an appeal by the major Hollywood studios in the three-year landmark copyright infringement case they brought against Internet service provider iiNet Ltd.

The full bench of five High Court justices unanimously dismissed the appeal by the studios, including Warner Bros, Disney, Fox and Paramount Pictures, alongside 29 other companies including Australian independent distributors and TV networks here under the umbrella of the Australian Federation Against Copyright Theft.

The court -- the equivalent of the U.S. Supreme Court -- ruled that iiNet held no responsibility for the copyright infringement carried out by its customers and declared that the Internet service provider had no technical power to prevent customers from using the BitTorrent system, upholding a previous federal court decision.

"Rather, the extent of iiNet's power to prevent its customers from infringing ... copyright was limited to an indirect power to terminate its contractual relationship with its customers," the court said.

The court also found that infringement notices sent by AFACT to iiNet did not provide the ISP "with a reasonable basis for sending warning notices to individual customers containing threats to suspend or terminate those customers."

The High Court dismissed the appeal with costs. iiNet said legal costs of the case to date were about $9 million.

"iiNet has never supported or encouraged unauthorized sharing or file downloading," iiNet CEO Michael Malone said after the ruling. "Today's High Court five-nil ruling confirms that iiNet is not liable for 'authorizing' the conduct of its customers who engaged in online copyright infringement."

Malone repeated previous assertions that increasing the availability of lawful, online content in a more timely, affordable and reasonably priced manner by the film industry brought the focus back to customers and was the best method to protect content owners' copyrights.

"Increasing the availability of licensed digital content is the best, most practical approach to meet consumer demand and protect copyright," Malone said. "We have consistently said we are eager to work with the studios to make their very desirable material legitimately available to a waiting customer base -- and that offer remains the same today."

Indeed it has been reported that AFACT, iiNet and other ISPs have been holding discussions with Australia’s attorney general to develop a policy for dealing with online copyright infringement.

AFACT managing director Neil Gane said Friday that the ruling recognized that legislative change was required to address the widespread copyright infringements via peer-to-peer technology in Australia and called on the government to make changes to the Copyright Act.

“Both judgments in this case recognize that copyright law is no longer equipped to deal with the rate of technological change we have seen since the law of authorization was last tested,” Gane said. "They both point to the need for legislation to protect copyright owners against P2P infringements.

“The judges recognize the significant rate of copyright infringement online and point to the fact that over half the usage of iiNet’s Internet service by its customers [measured by volume] was represented by BitTorrent file sharing, which was known to be used for infringing activities,” he said.

Gane added that overseas developments in online copyright protection have superseded Australian law since the case began more than three years ago. “Legislators, regulators and courts around the world have mandated that ISPs must play a central role in preventing online copyright theft,” he said. “Fortunately, many ISPs have come to the conclusion that being involved in online copyright protection is in their commercial interests. ISPs are becoming increasingly dependent on monetizing legal content and therefore protecting its value.”

Gane said it was too early to comment on the details of the decision but that the copyright owners would be having discussions with the government in due course.